Thursday, August 25, 2005

Coin of the realm

I like the euro. €.

When they first converted to the uniform European Union currency, I was kind of sad that European travel would lost the charm of different currencies. I used to enjoy looking at the different colors, sizes, words and images on the various currencies of a multi-country European trip.

Boy, have I gotten over that. The hassle of currency exchange windows, doing all kinds of multiplication and division in your head to figure out how much you’re paying, losing money every time you changed currency – don’t miss it at all. If you’re into different looks of currency, you can find different words and images on the Euro depending on which country minted it, but I find I don’t really bother any more. The old currency differences now strike me as about as much fun as getting your passport checked (another formality that is gradually passing from the intra-European scene).

I like that the euro is worth something somewhat close to the dollar. But perhaps most of all, I like its denominations. As you probably know, the smallest unit of euro paper money is the €5 bill. They have small change in 1,2,5,10, 20 and 50 cent coins, but pennies seem to be virtually out of circulation.

What I really like are the 1 and 2 euro coins. You can buy stuff with a single coin in European countries. I find that charming: like sailing, you are engaging in a form of commerce that goes back many centuries. I always feel wistful, or envious, reading historical tales in which characters carry big leather coin purses and transact all their small business with metal coins.

In the U.S., all our functioning coins – 1, 5, 10 and 25 cent pieces (the half dollar and dollar coins being so rarely circulated as to be non-functional) – are fundamentally pennies, because you can’t buy anything with just one American coin. Think about it: you can’t buy a snack (from a candy bar on up), or a pack of gum, or a drink (from a coffee or coke on up), or a newspaper or a postcard, or make a phone call, or mail a letter, or tip a waitress, for 25 cents or less.

With the 1 and 2 euro coins, you can get a light lunch – and even leave a tip – with a single coin. It’s cool.

In my lifetime, every U.S. experiment with revamping its currency has quickly failed. We’ve tried reissuing $2 bills and dollar coins a couple of times, and the fifty cent piece has always been there. I know that apologists for “the way things are” always say that “people don’t like the __ [dollar coin, two dollar bill, etc.].” But it seems to me these attempts have all flopped for a different reason: we never put enough into circulation. The numbers issued have been so small that the relevant coin or bill has been a curiosity, they quickly get hoarded by would-be collectors, and put out of circulation.

QUESTION: is paper money less harmful for the environment or less wasteful of resources than coin? If so, that's a good reason to keep dollar bills (though not pennies, of course.) If not, then I say, do it right: take the penny and the paper dollar out of circulation, and issue one and two dollar coins in sufficient quantities to get the job done. Heck, why not even a $5 coin?

FUNNY CULTURAL NOTE: If you were to pay a $5.02 charge in a store with a $10 bill, you might fish around for small change – a couple of pennies or a nickel – so you would get a $5 bill back, right? In Germany (and France, too apparently), if you give the cashiers that extra nickel, they will round up and keep the 3 pennies change without further discussion.

It could be argued that we're unusually conservative about our money -- hence the contingent of loony libertarians who want to put us back on the gold standard. I wonder if this has inhibited lawmakers from taking the obvious step of replacing the dollar bill with a dollar coin outright.

Tough to say how the various tradeoffs fall. Coins cost more to mint up front, but last forever compared to paper currency. You also can't make facsimilies of coins on color printers. Who knows about the relative environmental destruction from the papers and inks vs. metals. I would, in any event, rather carry $100 in the form of a few paper notes than equivalent coinage, for those rare times I'm not operating in the cashless society.

I would guess that coins actually are more damaging to the environment. Trees are a renewable resource, while mining for metals significantly alters the environment. I don't know much about the ink used to print money, though. In any event, I like my paper dollars, but I wouldn't mind if they got rid of pennies.

I was last in europe before the Euro was in circulation. Even then I really liked the 1, 2, and 5 DM coins. I much prefered them to paper.

We in the US have never taken larger denomination coins seriously. I agree that we haven't put enough of the alternatives in circulation to really be useful. Plus, the two different dollar coins I saw were too close in size to the quarter. They were doomed from the start. You've got to change more than the color.

I suspect (but can't prove) that most of the resistance to additional coins is from vending machine companies, banks, and others who handle coins. They don't want to spend the money to update all their coin handling mechanisms.

This is a bit similar to the failed attempt to adopt the metric system in the 70's. Yes, the public was not all that happy about it but the big push against it was the companies that did not want to re-tool and governments not wanting to replace a bunch of signs (not a small cost).

I would prefer a 1, 2, and 5 dollar coin. I think we could do without the 50 cent.

Interesting way of looking at this. I never like the dollar coins because in my mind coins are easily spent, while bills are not. The dollar coin makes me feel like it is less valuable for some reason. Perhaps silly reasoning, but it is easier for me to waste the dollar coins than the bills.

I liked the bigger coins, until I had a handful or two in my purse. They get heavy really fast. Though I'm positive that this occurred simply because I wasn't used to spending the bigger coins. I was more comfortable handing out bills for my transactions.

time to do a sex-discrimination analysis on your post. for example, men usually have pockets, so coins aren't that much of a hassle. women, even if they have pockets, won't use them lest they bulge and ruin the line of their clothes. so if a woman wants to avoid carrying an enormous satchel, she must stick to things that won't bulge in her pockets (a few bills) or use that ever-so-discreet tuck-in-the-bra tactic (again, better for bills)

Warren brings up a good point... I'm sure exotic dancers would prefer the conversion to 1 or 2 dollar coins - that means the smallest amount of paper money that could be tucked into a g-string would then be 5 dollars.

Being in the society for creative anachronism and having 1 dollar coins was fun for a while, but the jingling money pouch gets old after a while. It really does.

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